Techno-Geopolitics

US-China Tech War and the Practice of Digital Statecraft

Pak Nung Wong

• Editore: Routledge India
• Anno: 2021
• ISBN:
  9781000448795
• Edizione: 1
• Argomento: Politique et relations internationales
• Categoria: Géopolitique

Techno-Geopolitics explores contemporary U.S.–China relations and the future of global cyber-security through the prisms of geopolitics and financial-technological competition. It puts forward a new conceptual framework for an emerging field of digital statecraft and discusses a range of key issues including the controversies around 5G technology, policy regulations over TikTok and WeChat, the emergence of non-traditional espionage, and potential trends in post-pandemic foreign policy.

Analysing the ramifications of the ongoing U.S.–China trade standoff, this book maps the terrain of technological war and the race for global technological leadership and economic supremacy. It shows how China's technological advancements not only have been the key to its national economic development but also have been the core focus of U.S. intelligence. Further, it draws on U.S.–China counterintelligence cases sourced from the U.S. Department of Justice and Federal Bureau of Investigation (FBI) to explore emerging patterns and techniques of China's espionage practice.

A cutting-edge study on the future of statecraft, this volume will be of great interest to scholars and researchers of international relations, security and intelligence studies, information technology and artificial intelligence and political science, especially U.S. foreign policy and China studies. It will also be of great interest to policymakers, career bureaucrats, security and intelligence practitioners, technology regulators, and professionals working with think tanks and embassies.

1
Introduction

Beneath the U.S.-China trade war

DOI: 10.4324/9781003047100-1

1.1 Introduction

What was the underlying dynamic for the Trump administration of the United States (U.S.) to launch the trade war with China from 2018? To answer this question, this introductory chapter will examine the following issues: (1) the U.S.-Japan trade war in the 1980s and 1990s, (2) how the U.S.-China trade war spilled over to such international arena as the World Trade Organization (WTO), (3) Trump’s apparent rationale to close the U.S. trade deficit, and (4) how the Coronavirus Disease 2019 (COVID-19) exposed the U.S. biotechnological under-capacity. I will argue that, beneath the U.S.-China trade war, the technology competition between the two powers is actually the more deep-seated structural source of their ongoing unsettling rivalry.

Former President Donald Trump (2017–2021) launched a series of trade wars against the American allies and other countries, including Canada, the European Union (E.U.), Japan, India, Taiwan and Turkey. In particular, Trump’s trade war with China starting from April 2018 caught wide global attention because the U.S. and China were the two largest economies in the world. Apart from levying additional American tariffs on Chinese goods, Trump cited national security concerns and banned the Chinese technology giant Huawei’s 5G technologies and urged the allies to follow the ban. He also banned the popular Chinese social media apps, WeChat and TikTok. Trump’s moves, however, spurred a public debate in China on whether China should seek to decouple from the U.S. in the long term.¹ Therefore, by the end of 2020, the Chinese government formally announced their long-term plan to achieve technology independence.²

Many governments and analysts feared that the U.S.-China trade frictions and a potential economic-cum-technology decoupling between the two great powers would negatively affect others’ economies, disrupt global supply chains and throw the global economy into recession. After some negotiations, the U.S. and China reached an initial trade agreement by the end of 2019. Trump needed the deal for his re-election in 2020. Beijing’s willingness to buy substantial agricultural products from the ‘swing states’ (e.g. Ohio, Iowa and Wisconsin), where Trump once succeeded in garnering voters’ supports in his 2016 electoral victory,³ also echoed John Bolton’s claim that the Chinese Communist Party (CCP) might have supported Trump’s bid for the second U.S. presidency.⁴

Against such international dynamics, this chapter argues that, despite the U.S.-China trade war being apparently about trade disputes, it reflected a deeper dimension in the U.S.-China structural rivalry – technological competition for global economic supremacy. I will first examine the U.S.-Japan trade war in the 1980s and 1990s as a comparative reference to identify a few observations about the U.S.-China trade war.

Second, I will examine how the U.S.-China trade war spilled over the international disputes into other international organizations. Using the WTO as a case study, I highlight that Trump’s persistent blockade of the WTO Appellate Body judgement appointments not only corroded the post-war liberal international order that the U.S. created and led, it also discredited the U.S. global reputation and leadership status.

Third, through a historical-structural analysis of the formation of the U.S. chronic trade and current account deficits, I will argue that using trade war strategy to rectify American trade deficits neither had any scientific ground nor could lead to any fruitful result. As Trump’s trade war with China focused mainly on Chinese technological products, I argue that, beneath the trade war, there was actually a ‘tech war’ – using technology competition to compete for global economic supremacy as a scientifically unfounded yet populist strategy to seize American state power.

Finally, the COVID-19 pandemic severely hit the U.S. from March 2020, causing a scale and speed of economic recession unprecedented since the Great Depression in the 1930s. Due to the lack of effective policy measures, medical supplies and protective gear to contain the coronavirus spread, the U.S. population suffered from the highest infection number and death toll in the world, thus discrediting the U.S. state incompetency. COVID-19 also showed that the Trump government committed a serious strategic error in launching the trade war with China too early before the U.S. succeeded in relocating and restructuring the global supply chains.

1.2 Lessons from the U.S.-Japan Trade War

According to Japanese economist Takeshi Abe,⁵ the factors contributing to the trade frictions that China has recently experienced with the U.S. are similar to those of Japan in the last century. Before the Second World War (WWII), Japanese textile products had already created a lot of pressure upon the U.S. textile industry. After WWII, Japanese textile and heavy industries surpassed the U.S. counterparts. In 1968, Japan quickly recovered from the post-war rubble and became the world’s second-largest economy. In the past four decades, China recorded impressive economic growth and has reached the same ‘trade-superpower’ status as Japan did in the 1970s.⁶

From 1970 to the 1980s, Japanese electronic products, home appliances and cars enjoyed growing and substantial market shares in the Western markets (the largest was the U.S., whereas the second largest was Europe). American voters in the most severely hit industrial areas in Detroit and the ‘rust belt’ actively lobbied the officials and politicians in the U.S. government and Congress to sanction Japanese imports.⁷

In 1981, the Republican Party’s Ronald Reagan was elected the 40th U.S. president (1981–1989). Reagan immediately changed the past administration’s passive policy in merely restricting Japanese imports by adopting the more aggressive trade policy in seeking to expand U.S. export to Japan. After rounds of trade wars and talks, the U.S. signed the ‘Plaza Accord’ with Japan in 1985 with France, West Germany and the U.K. The quadrilateral agreement required Japan to give up its post-WWII linked exchange-rate system. The move led to the emergence of the ‘strong Japanese yen, weak U.S. dollar’ currency exchange relationship.⁸ Such exchange rate arrangement immediately caused a surge of U.S. exports to Japan but weakened Japanese exports to the U.S. Also, Japanese property and stock market prices continued to inflate until its ‘bubble economy’ burst in 1990. Nonetheless, the U.S.-Japan trade dispute did not stop.

From 1989 to 1990, President George Bush (1989–1993) of the Republican Party changed the former Reagan administration’s policy in enlarging U.S. exports to Japan. Under the newly conceived ‘Structural Impediments Initiative’ policy, Bush further sought to remove the structural barriers within the Japanese market by identifying Japan’s internal structural problems. Bush’s goal was to completely open up and liberalize the Japanese economy.⁹

In 1993, the Democratic Party’s Bill Clinton was elected as the 42nd president (1993–2001). He continued to adopt Bush’s structural trade war approach towards Japan by setting up ‘objective criteria’ to remove the deep-seated structural barriers within the Japanese market. Initially, Japan objected fiercely and feared that any ‘objective criteria’ set were resultant of America’s arbitrary judgements. But Japan eventually complied with the U.S. demands.¹⁰

In view of the previous pattern, Takeshi Abe reflected that the U.S. trade war strategy to Japan entailed both unilateral and multilateral tactics, which contradicted the ethos of multilateralism that the U.S. government promoted in the Uruguay Round of General Agreement on Tariffs and Trade (GATT) from 1986 to 1994. Because of the U.S.-Japan trade war, Japan entered into a period of economic recession, which is widely known as the ‘lost decade’ in the 1990s and 2000s.¹¹

The U.S. trade war strategies toward Japan included two aspects: (1) import expansion policy, and (2) market opening policy. The former policy pressed down Japanese tariffs, loosened Japanese import restrictions and altered the Japanese currency exchange system. It was intended to increase U.S. total exports to Japan. The latter policy aimed at removing the systemic and structural barriers within the Japanese market. It was intended to enhance more American products absorbed into the Japanese market. Based on the last century’s U.S.-Japan trade war, I have a few observations.

First, Japan’s ‘lost decade’ economic recession was indeed attributed to the U.S. trade war. However, it was Japanese policymakers’ faulty assessment that more deepening U.S.-Japan liberalist interdependency could bring more benefits to Japan. The Japanese policy mistake then allowed the U.S. government to tailor-make the Japanese liberalization policy that served American national interest at the expense of Japan’s. In other words, despite the fact that liberalist trade policy is o...